About the author I-5 Acknowledgement I-7 Preface I-9 Chapter-heads I-11 MARGINAL COSTING AND DECISION MAKING-I

Transcription

1 Contents About the author I-5 Acknowledgement I-7 Preface I-9 Chapter-heads I-11 1 MARGINAL COSTING AND DECISION MAKING-I COST VOLUME PROFIT ANALYSIS 1.1 Concept Assumptions of Cost-Volume-Profit Analysis Margin of Safety Introductory problems Multiple products Semi-fixed and semi-variable costs Cost indifference point Breakeven charts Angle of Incidence Profit Volume Charts 1.42 THEORETICAL QUESTIONS MARGINAL COSTING AND DECISION MAKING-II RELEVANT COSTING 2.1 Concept of relevancy Sunk costs 2.2 I-13

2 CONTENTS I Three aspects of decision making problems Management Information System Aspect Fixed Cost Aspect Opportunity Cost Aspect Incremental/differential costing Introductory decision making problems Discontinuance of product Shut Down Point Closing Down One input as key factor Multiple key factors Purchase v/s manufacture Opportunity cost Allocation of joint cost among joint products Decision-making under uncertainty General problems 2.77 THEORETICAL QUESTIONS VARIABLE COSTING V/S ABSORPTION COSTING 3.1 Concept 3.1 THEORETICAL QUESTION 3.16 APPENDIX : COST CONTROL ACCOUNTS STANDARD COSTING AND BALANCED SCORECARD STANDARD COSTING 4.1 Concept Material Cost Variance Labour Cost Variance VO Cost Variance FO Cost Variance Interdependence of Variances Sales Variances Reconciling Budgeted Profit with Actual Profit Reconciling Standard Profit with Actual Profit Single Plan v/s Partial Plan Ratios in Standard Costing Joint-Products & By-Products 4.72

3 I-15 CONTENTS Revision Variance Investigation of Variances Output Method for Variable Overheads Output Method for Fixed Overheads 4.84 BALANCED SCORE CARD 4.2 Concept The Four Perspectives Balance Score Card - As a Tree Analysis of Operating Income for Balanced Score Card 4.87 THEORETICAL QUESTIONS BUDGETARY CONTROL 5.1 Process of budgeting Flexible budgeting Conflicting roles in budgeting Performance budgeting Zero base budgeting (ZBB) Characteristics of ZBB Process of ZBB Advantages of ZBB Limitations of ZBB Superiority of ZBB ZBB and Productivity Improvements 5.43 THEORETICAL QUESTIONS ACTIVITY-BASED COSTING 6.1 Concept Value-added and non-value-added activities Four different categories of activities Need for emergence of activity based costing Corporate strategy and ABC Difference between ABC system and traditional costing system ABC for highly automated plants 6.33 THEORETICAL QUESTIONS 6.33

4 CONTENTS I-16 7 SERVICE-SECTOR COSTING 7.1 Concept Special Features of Service Sector Costing Methods of Costing in Service Sector Activity based costing (ABC) in service sector Customer costing Direct product profitability 7.35 THEORETICAL QUESTIONS PRICING 8.1 Concept Minimum price Regular price or cost plus price General problems General guidelines Pricing strategies Penetration Pricing Price Skimming Price Discrimination Service Sector Pricing Pareto Analysis Selling below marginal cost 8.32 THEORETICAL QUESTIONS TRANSFER PRICING 9.1 Concept Objectives of transfer pricing Methods Cost based Methods Market Price based methods Profit shared method/contribution shared method Negotiated price method 9.2 THEORETICAL QUESTIONS 9.39

5 I-17 CONTENTS 10 TARGET COSTING 10.1 Concept Target costing principles Requirement of Market Research Benefits of target costing Steps of target costing Controlling the costs and pricing of the products Fostering team work THEORETICAL QUESTIONS THE THEORY OF CONSTRAINTS 11.1 Concept Throughput accounting (also referred as Throughput Costing) Three measurements of TOC Synchronous manufacturing Theoretical Questions JUST - IN - TIME AND BACKFLUSH COSTING 12.1 JIT JIT Purchasing JIT Production Backflush costing Competitive environment Profitability Eliminating wastage of resources Impact on overheads Kanban THEORETICAL QUESTIONS TOTAL QUALITY MANAGEMENT 13.1 Concept Advantages/benefits Six Cs of TQM Four Ps of Quality Improvement Principles Quality costs 13.2

6 CONTENTS I Critical success factors for the implementation of TQM Value additions P.R.A.I.S.E THEORETICAL QUESTIONS LIFE CYCLE COSTING 14.1 Concept Total Cost of Ownership Product Life Cycle Costing Stages of Life Cycle Essential features of life cycle costing Benefits/importance Structural and executional cost drivers THEORETICAL QUESTIONS THEORETICAL ASPECTS VALUE CHAIN ANALYSIS 15.1 Concept Grouping of Activities Assessing the Competitive Advantage Strategic Framework Importance for Cost Management Cost Reduction 15.4 UNIFORM COSTING 15.2 Concept Advantages of Uniform Costing Essential Requisites for Installation 15.9 VALUE ENGINEERING 15.3 Concept 15.9 COST PLUS CONTRACTS 15.4 Concept Advantages Disadvantages BENCHMARKING 15.5 Concept The Benchmarking Process 15.12

7 I-19 CONTENTS Prerequisites for Effective Benchmarking Types of Benchmarking Limitation Benchmarking Code of Conduct MRP 15.6 Concept Two Plans of MRP Objectives of MRP Requirements/Input/Data Requirement of MRP Prerequisites for Successful Operation Benefits ENTERPRISE RESOURCES PLANNING 15.7 Concept Features Benefits of ERP Limitations of ERP GENERAL TOPICS 15.8 Operational Database Routinely Recorded Data Disinvestment Qualitative factors affecting outsourcing decisions Changing manufacturing costs Inventory holding during inflationary conditions 15.23